As we reported months ago, Peggy and Micah’s home was in foreclosure after they defaulted on their home loan. Well fast forward to today, and Peggy is now suing three different banks, BAC Home Loans Servicing, U.S. Bank National and PNC Mortgage, in an effort to save her home. Peggy is claiming the banks didn’t honor a loan modification agreement.

According to RadarOnline, Peggy and Micah owe $1.3 million on the home with multiple mortgages. After purchasing the home in 2006, Peggy, 41, and Micah made payments on time for 2 years. They however began to experience financial difficulties and the payments on two loans became irregular. They have one mortgage for $1 million, and a second for $312,540 according to records. The couple also quit paying their Orange County property taxes but have since negotiated a payment for that.

In the court documents, Peggy claims she made a deal to pay interests only for 10 years but was shocked in November when the banks still filed a foreclosure notice. “(Peggy) is determined to keep the property,” the lawsuit states. “It is her family’s home, and she does not want to lose the Property in a foreclosure sale.”

Radar adds the home was last assessed at $875,000 in 2009, way down from the $1,379,000 they paid for it back in 2006.

As mentioned above, Peggy and hubby Micah have been shown on the show spending money on jewelry, plastic surgery, and parties, aka non-necessities, at the same time their home loan was being defaulted on. In fact, Peggy brags in the opening credits of the show about owning a Bentley. Peggy’s home was scheduled to go up for auction on March 17 but that was ultimately canceled. But hey, who needs a home to sleep in when you own a shiny Bentley!

Court records show Peggy’s home had a default notice dated Nov. 16, 2010, with the amount in default at $190,713.

Moving on to tonight’s all new episode of the OC housewives titled “It’s Not a Competition.” On the 10th episode of this season (yes, we’re already on episode 10!), Peggy and Alexis discuss their ever-fraying relationship, but their conversation only creates more tension. Meanwhile, Slade’s mother arrives and corners him about his job status; and Vicki and Peggy gather for some wine and whine.